Good morning, ladies and gentlemen, welcome to the Charlotte's Web Holdings, Inc. 2023 Q1 conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session with the company's analysts. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, May 12th, 2023. I would now like to turn the conference over to Cory Pala, Director of Investor Relations. Please go ahead. Thank you, Sergio. Good morning, everyone. Thank you for joining us for our 2023 Q1 earnings conference call for Charlotte's Web Holdings, Inc. Our earnings press release was issued this morning and posted on our website along with our financial statements. Our 10-Q has been filed on SEDAR and EDGAR. Leading our call this morning is CEO Jacques Tortoroli, CFO Jessica Saxton, and COO Jared Stanley. Jacques and myself are each joining from remote locations today. On this morning's call, we will review our Q1 financial results and provide some color on some recent strategic initiatives. We'll take questions from our analysts at the end of our prepared remarks. A replay of this call will be available through the next week, accessible per the details provided in our earnings press release. A webcast replay of this call will be available for an extended period, accessible through the IR section of our website. Certain statements made on today's call, including some answers we may provide to certain questions, may include content that is forward-looking in nature and therefore subject to risks, uncertainties, and factors which could cause actual future results or company performance to differ materially from implied expectations. Risks surrounding such forward-looking statements are all outlined in detail within the company's regulatory filings. During the call, we will refer to supplemental non-GAAP accounting measures, including adjusted EBITDA, which does not have any standardized meaning prescribed by GAAP. Please refer to the earnings release that we filed this morning for a description of adjusted EBITDA as well as a reconciliation to the comparable GAAP financial measures. With that, I'll now hand over the call to Charlotte's Web Chief Executive Officer, Jacques Tortoroli. Jacques. Thank you for joining our call. Thank you, Cory, and happy Friday. This morning, we reported Q1 revenue of $17 million, down 12%, with volumes down 5% versus the prior year, modestly below our expectations. Jessica will review selected financials momentarily. I wanted to ground us in the market and then give you an update on the progress in our strategic initiatives. Looking at the CBD category, the CBD market is approximately $4.4 billion, according to Brightfield Group. The top 20 brands share 17%, with Charlotte's Web at number one. While the one FDA-approved cannabinoid drug represents 16% share. That leaves over 60% of the market, or roughly $3 billion, to some 2,000 brands. By the way, down from over 3,500 brands in 2021. Therein lies the size of the prize. Before regulation, which we shouldn't lose sight of as we discuss each quarter. Charlotte's Web is number one, with 3% share of the total market and 6% share if you exclude the channels, formats, and pharma sectors we don't today participate in. We are number one in brand metrics like awareness and loyalty, number one in retail. Retail represents 25% of the total market, and we have category-leading shelf velocities. In e-commerce, which is 35% of the market, we rank number one with less than 4% share. Finally, given the high fragmentation of very small brands in the market, we expect to see a significant culling of the number of competitors to continue without regulation in Washington, D.C., and certainly when regulation happens. Our brand equity, full spectrum, NSF-certified broad spectrum products, innovation pipeline, and our IT, the opportunity to expand our consumer reach and relevance through ReCreate starting later this summer. Our partnership with MLB and our balance sheet uniquely position us to grow our number one share over time. Our recently announced partnership to enter into an IND path for a botanical drug with the FDA opens the potential longer term for us to participate in a substantial part of the market that we don't do today. We previously framed our strategy with you, namely returning to growth, winning in D.C., and unlocking the value of Charlotte's Web IP in botanical wellness. Let me briefly update you on some significant progress in the quarter on each pillar. First, returning to growth. Last month, we announced the launch of ReCreate, a new botanical lifestyle brand designed for young and attractive, active wellness seekers in sports and other valuable cultural verticals. ReCreate capitalizes on the growing trend of CBD-infused functional botanical wellness formulations for self-care and mental well-being, certainly among millennials and Gen Zers, who make up approximately 47% of this multi-billion-dollar CBD market. They're also among the most active daily users of CBD when they wake up throughout the day across different occasions, making this a very important demographic for broad spectrum CBD. Launching this new needs-based driven brand with new formulations across multiple formats coincides with the first year of our MLB partnership and packaging that bears the iconic MLB logo with NSF certification. We launched ReCreate Daily Edge Tincture last month, exclusively available on our e-commerce site, and we'll begin rolling out new formats, starting with a line of needs state gummies, which will be available on our site in the summer and in retail during the H2 of this year. ReCreate products have secured early interest from leading retailers including Fresh Thyme, The Vitamin Shoppe, and others, as well as Southern Glazer's Wine & Spirits. We recently appointed Andrew Shafer as our Chief Marketing Officer, leading our cross-platform activations with MLB in the sports vertical to ReCreate, to drive online traffic and sales. Andrew comes to us from two decades of Verizon, leading brand strategy, digital experience, social marketing, while benefiting as well from his work with professional sports partnerships. Finally, we recently announced a partnership with Phillips Pet Food & Supplies, the largest pet specialty channel distributor, servicing over 14,000 retail doors across the country. By the way, pet is a $400 million channel, but today, less than 10% of our revenues in the quarter. The second pillar of our strategy is regulatory. In Washington, D.C., and increasingly at the state level, we are actively progressing both. Jared has taken a critical leadership role in these initiatives and will speak more to those in his remarks. We also activated the third strategic pillar, unlocking the value of the company's IP in botanical wellness. This means formally pursuing an IND pathway, seeking FDA-approved botanical drug based on our proprietary cultivars through the right partnerships and structures. Jessica and Jared will each touch on this in their remarks. With that, I'll now pass the call over to our CFO, Jessica Saxton. Thank you, Jacques. Our financial results and Adjusted EBITDA are reviewed in detail in our earnings release in 10-Q. As such, I will not go through all of them on this call. However, I am happy to answer any specific questions you have in our Q&A session. Net revenues of $17 million declined 12% compared to last year, with B2B down 8% and e-commerce down 14%. However, our unit volumes only declined 6%. Consumer shifts from tincture to other formats, principally gummies, continues for the category and for us specifically. Tinctures and gummies are number one and number two formats in the market with 19% and 15% share, respectively. This continued shift represents a strain on revenues given the price points of tinctures versus gummies. We expect this to continue until the growth in gummy volumes more than offsets the drop in tincture volumes. In the quarter, this mix shift resulted in tincture revenues declining five points to 27% of our revenue mix, with gummies up seven points to 43% of our revenue mix. In the quarter, gummy volumes were up high single digits year-over-year. Charlotte's Web operates the largest e-commerce business in the industry. Our e-commerce business generates more than 66% of our revenues with attractive gross margins. B2C revenue of $11.3 million was 14.2% lower on a year-over-year basis in Q1 as we continued to experience lower traffic to our site. Increasing top of the funnel by educating and attracting new consumers into CBD and Charlotte's Web remains the number one priority in turning around the company's overall revenue trajectory. As we have talked about previously, we believe the MLB partnership, as we go through the seasons and activate against MLB's jewel events, leveraging the league's enormous fan base and media platforms, will be an unlock against this business priority, as will ReCreate our new lifestyles brand, which is both attractively priced and carries the MLB logo on packaging. Our online conversion rates remain strong at 11.7%. Our subscribers account for approximately 40% of revenues, showcasing that when we bring people into our ecosystem, they go through their consumer journey from awareness to purchase, to ultimately becoming subscribers, representing significant lifetime value. We are prioritizing growing traffic to our web store and have a cross-functional team working on improving the user experience on our site. In the food drug mass retail channel, Q1 sales were 9.3% lower year-over-year, outperforming the total category, which was down 10.1%. As a result, we held 18.7% share in retail dollar volume and the number one channel position. In FDM, we increased the number of retail doors while we saw a decrease in the number of doors for the overall category. This speaks to our brand strength. In addition, our ARP was up 7% in FDM, while the category was down 15%. We hold four of the top 10 SKUs in the channel. In the natural channel, Q1 sales were 12.8% lower year-over-year, outperforming the category again, which was down 13.5%. I want to spend a minute on the natural channel. What we saw in the last quarter was interesting. First, we grew doors with existing customers within the quarter at about two times the category rate. However, while more doors are selling Charlotte's Web and CBD, retailers are also reducing the total facings on shelf and the number of SKUs and formats carried. Principally taking gummies and reducing tinctures. For us, the number of doors carrying our gummies grew ahead of the category, while the number of doors carrying our tinctures declined slightly higher than the category. Net, despite significant incremental penetration in the quarter, given the mix, revenues were negatively impacted. Given our leadership in the category and with the highest velocities, that bodes well for the longer-term opportunity for Charlotte's Web to grab an incremental share of shelves. We expect to gain further market share pending customer receptivity to our soon-to-launch ReCreate gummies and positively impact revenues when the rate of growth in other formats, particularly gummies, eclipses the decline in tinctures. Moving to SG&A. Our Q1 SG&A was 14% lower year-over-year despite the addition of the MLB rights fee amortization, as well as a $1 million non-cash amortization expense from the convertible debenture we completed with BAT last fall. Going forward, each quarter will include an amortization expense in our SG&A related to the MLB asset, reflecting this valuable three-year partnership. Notwithstanding the additional MLB expense, we expect SG&A for the full year of 2023 to be comparable to 2022. Excluding these amortization items, our SG&A expenses in Q1 were approximately $14.7 million, which is a decrease of more than 20% year-over-year. Our material reduction in operating expenses significantly reduces our cash burn to a manageable level. Net cash used for operations was $6.1 million in Q1 2023 versus $4.7 million last year, with the increase entirely attributable to the initial quarterly rights fee payment to MLB. With our $61 million cash position at the end of the Q1, we are in a stable financial position moving forward, which is also an advantage against the bulk of our competitive set in the current environment. Jacques discussed earlier the collaboration with AJNA BioSciences and BAT to pursue a botanical drug. I wanted to give a little bit more insight into the rationale of the structure and the benefits for Charlotte's Web and our shareholders. On 6 April 2023, we announced this collaboration with BAT and AJNA with the formation of DeFloria, which each party is contributing. Charlotte's Web is contributing existing studies and a license permitting the use of certain proprietary hemp intellectual property, including clinical and consumer data. AJNA is contributing laboratory provisioning, regulatory services, and IND clinical expertise such as Dr. Orrin Devinsky. BAT is contributing $10 million to fund phase I of the project, which is being fully managed by AJNA. Financially, the funding from BAT and other potential third parties reduces capital risk for Charlotte's Web. We maintain the opportunity to participate in future funding rounds, though not obligated. I will now turn the call over to co-founder and COO, Jared Stanley. Thank you, Jessica. Before getting into regulatory, let me give a brief update on our progress with our partner, Tilray, in Canada. We are progressing on tinctures, topicals, capsules, and gummy formats and on track to launch tinctures late this quarter as we await Health Canada approvals. Next, we are focusing our attention on topicals and capsules with gummies as final phase. Our gummy formulations combined with Health Canada requirements will take more time. For this reason, we want to ensure we bring other great products to market in a timely manner while ensuring we launch our gummy SKUs with confidence and consistency to what is produced in the U.S. Let me give you an update on the regulatory front, starting with the state level. It's been 10 years since CBD was introduced to American consumers as a dietary supplement choice. It has been nearly five years since the passage of the 2018 Farm Bill. Since then, the lack of FDA guidance has forced states to step in, specifically to address the recent concerns of hemp-derived delta-8 THC and other intoxicating hemp cannabinoids. We have and will continue to educate legislators in this process to ensure that consumer access to therapeutic full-spectrum CBD is preserved while regulating intoxicating compounds like delta-8 THC. We have been present in states like Virginia, Florida, and Colorado, where our voices were heard, and Charlotte's Web full-spectrum products will continue to be accessible to consumers. A few states have implemented regulatory requirements that impact the sale of non-intoxicating CBD products, and we will take appropriate steps through the legislative process. While this process is coming to an end in 2023, this will be an ongoing focus of the company. On the federal front, as stated in previous earnings, we are seeing more come together in the last month than we have in years in D.C. To highlight impactful events, FDA's position in January stated a need for a new regulatory lane for CBD and their commitment to work with Congress on a new path. We responded by supporting Congress in compiling industry safety and toxicology data to address the FDA's concerns. H.R.841 was reintroduced in the 118th Congress, now as H.R.1629. This shows the intent of Congress to regulate CBD as a dietary supplement. Furthermore, Congressman James Comer sent a letter to the FDA investigating the agency's failure to regulate CBD as a dietary supplement. Considering our engagement with Congressman Griffith's staff and the letter sent by Congressman Comer, it is clear Congress is holding their position to regulate CBD as a dietary supplement. We have established the foundation to support Griffith through Coalition for Access Now, a political consumer advocacy 501(c)(4) we support. We are addressing the FDA's concern over the safety of CBD by uniting industry tox studies and sharing the reports with Congress. We engaged an objective firm to bring the industry data together to recommend a safe daily use of CBD based on science. We are also actively participating in and supporting the industry coming together under one united strategy to progress the dietary supplement path for CBD. This does not mean we will find a one-size-fits-all approach for every CBD provider. It means the industry is embracing the actuality that a set of standards must be met to address the FDA's concerns. Our goal is to embolden Congress with the confidence and credibility needed to land a favorable market for CBD. At a minimum, this will require amending the Griffith Bill through the legislative process with aligned industry stakeholders to ensure CBD products are standardized across labeling and warning statements, accurate testings, protections against false claims, and GMP standards and facilities registered with the FDA. Our journey began by amplifying the consumer's voice through our support of Coalition for Access Now. This served as the cornerstone of our strategy in Washington, D.C. Our focus expands to encompass the entire industry, recognizing the crucial collaboration between industry and consumer voices. It is essential that we synchronize our efforts to advance the Griffith Bill this year. With these vital elements converging, I have full confidence in the progress we will achieve. We're simply not waiting for the FDA to act, but are driving the destiny of our business. The recent announcement of our biotech partnership with AJNA BioSciences and BAT is a testament to this commitment we have made to shareholders. DeFloria is the name of the entity created to hold the IP and investigational new drug asset in the third leg of our business strategy, the botanical drug path. It's critical to understand the difference between a botanical drug and a traditional pharmaceutical to realize the vast market potential. A botanical drug refers to a medication that is derived from natural plant sources. It is developed, formulated, and standardized to contain specific active ingredients or mixtures of plant-based substances. They're not isolated and synthesized like traditional single compound pharmaceuticals, yet they hold the same requirements for safety, quality, and efficacy for pharmaceutical use. The development of botanical drugs involves rigorous scientific research, clinical trials, and adherence to established guidelines to demonstrate their effectiveness and safety for treating specific medical conditions. Botanical drugs are regulated and approved by the FDA. Botanical drug guidance was introduced in 2004 and expanded in 2017. Combining this with CBD being removed from the Controlled Substances Act in the 2018 Farm Bill enables this path to create an entirely new pharmaceutical category for full-spectrum CBD. This is the logic behind our IP investment into DeFloria. The joint venture has an amazing team of senior drug experts led by AJNA's Chief Medical Advisor, Dr. Orrin Devinsky, and recently appointed Chief Scientific Officer of Charlotte's Web, a 21-year cannabinoid researcher, Marcel Bonn-Miller. The team has already made significant strides in the drug development process. AJNA has engaged with the FDA on behalf of DeFloria and completed its first pre-IND meeting to ensure the partnership meet the administration's botanical drug guidance. This meeting provided valuable agency feedback to inform DeFloria's clinical strategy and trial roadmap. We are continuing pre-clinical and commencing phase I trials this summer. We believe the venture has enough seed funding from BAT to complete the investigational new drug application and the phase I clinical trials. I'll now hand the call back over to Jacques. Thanks, Jared. Continue to execute on our three-pillar strategy of returning to growth, winning in D.C., and unlocking the value of our IP and botanical wellness. We're confident about our strategic moves and the long-term view of the business. However, in the short term, pending a constructive regulatory outcome, our optimism remains reserved. In stepping back for a moment, we didn't grow revenues in the quarter. However, slowed the rate of decline to 12% in revenues and 5% in volumes. There are signs of momentum we should not let be drowned out. We nearly doubled the category growth in expanding doors in the natural channel. We grew distribution double digits in FDM while the category was down mid-single digits. Our average retail price in FDM is up single digits, while the category pricing is down double digits, indicating the strength in our brand equity, while ineffective brands will not turn at any price. Our B2B revenue growth is being muted by mix from tinctures to gummies. This will pass and year-over-year growth will return. Particularly with our pending new ReCreate gummies spurring incremental SKU sales, it will help grow the traction while bringing new customers into our brand worlds and e-com. We're working on improving the user experience on our e-com platform. We have our cost base in control. We're making progress on regulatory at both the federal and state levels. MLB for us kicks off in the H2 of the year, starting with the All-Star game in Seattle in July. We have the balance sheet to win. I want to make sure we're sharing a balanced view of where we are and where we're heading. Now I'll turn the call back over to Cory. Thank you. Sergio, can we open the call to questions? Ladies and gentlemen, we'll now open the question and answer session. Should you have a question, please press star one. If you want to withdraw your question, please press star two. Your questions will be pulled in the order they are received. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please, for your first question. Your first question comes from Scott Fortune from ROTH MKM. Please go ahead. Good morning and thanks for the questions here. I appreciate the comments in the at first, Jacques, on kind of the market share, but just want to focus a little bit on the market share and what you're seeing in the competitive, you know, the very competitive fragmented market here, as small brands continue kind of the discount and the shift to the values here. Can you provide a little more color? You mentioned obviously, it's come down from, you know, 3,500 competitors and many with limited capital. You mentioned kind of the shelf at stores. With your activation and support at the store level, can you provide a little more color? Is Charlotte's Web starting to pick up shares here, getting more shelf space? Kind of a little bit color on the rationalization of SKUs on these shelves and how you see this moving forward. Yeah, sure. Thanks for the question, Scott. Look, I think, and I said it in the remarks, but, you know, 3,500 quote-unquote "competitors" to 2,000 now. You know, we clearly see that culling, you know, expected to continue even before regulation and most dramatically probably after regulation. You know, you frame the competitive environment a little bit, you know, so many small brands undercapitalized and certainly not with the brand equity or science credentials, you know, that Charlotte's Web can bring to bear. We're optimistic that we can grow share, you know, in a category that clearly, you know, declined last year, according to Brightfield. We are, although we're doing it by contracting less at the moment than growth. Clearly, you know, there are factors for that, including the mix shift of tinctures to gummies, as one predominant element to it. You know, what we're seeing is I think a real opportunity to grow share because as retailers are clearly seeing that not every CBD brand has the same velocity on shelves, right? I think that provides an opportunity for us with the highest velocity in the industry to grab that incremental shelf space as competitors are delisted. You know, I look at that as a real opportunity for us that we can really further leverage through the introduction at retail later this year of the ReCreate brand, which as Jessica alluded to, you know, will also be at a price point that would be more affordable and SKU formats that are smaller packs to make the consumer coming into the brand for the first time, you know, afford to try, right? We know by looking at our e-com statistics that once we bring people into our brands, you know, they stay because what they perceive to be the value of the brands for them on a personal basis, and they become lifelong consumers for us. We're excited about the opportunity. It's not going to be, you know, overnight, but I think we're doing everything right from a branding, from a pricing, and from a retail and e-com point of view to position ourselves to gain additional share as we go forward here in the market. I think, just a quick follow-up on that. Let's say we do get, you win in D.C., and we do get the regulatory side of things coming on board. Kind of what's your sense of the brands that will be left that can meet the high regulatory standards expected from that standpoint? And then any momentum or timing on H.R.1629 as it gets closer to the Farm Bill? Just kind of a little expectations for the number of brands that can meet, you know, these high regulatory standards? Yeah When that occurs. Yeah. I'll start and then hand it to Jared to answer the timing piece, and he'll have a much better perspective on the brands. Look, my view, and we've talked about this, is, you know, we're certainly not going to have thousands of brands. How many we have, you know, I don't know, but I don't suspect it's more than 20, 30 at that. I think you'll see a lot of the brands won't be able to get through the FDA gate, obviously have to pivot. I think between now and then, you'll see more competitors fall away as they don't have the capital to compete and invest behind whatever brands they do have. I think the culling will continue. I think post-regulation you'll have a very limited number of competitors in the market compared to what we see today. Jared, do you want to add anything there? Yeah. Look. Hey, Scott, how are you? You know, I mean, the industry has to come together. We're not going to get support, passing a bill that's restrictive to an industry. What we're seeing and what I meant by my comments is that you're starting to see, you know, what really we call in passing this bill, there's two strategies. There's focusing on regular order and what we're calling the four corner strategy. Focusing on regular order is really just the legislative process where you have committee hearings, and you start to have markup, and you amend the legislation, through committees of jurisdiction. In this process, this is where industries will unite and will engage the committees, and it'll really be the industry that supports the technical drafting to ensure the final legislation, you know, reflects the best approach for the industry, which ultimately we're here for the consumer, which then gives the best guarantee to consumer access. In that process, it's very important because we've had the FDA come in with their concerns. For the industry to come together to also address the concerns made by the FDA is a very important process as we amend this bill through focusing on regular order. The next part is you've got, you know, the, what we call refer to as the four corners. You can look at H.R.1629 with 21 co-sponsors where, you know, previously had, you know, 45, 46. By focusing on the four corners, this is where we get a little bit more strategic. We have to realize that there's very narrow majorities in the House and Senate, and it's a very politically charged environment. Very few pieces of legislation will make it to the president's desk this year. In other words, meaning CBD and FDA legislation is not going to move as a freestanding bill. What we see instead is we will be focusing on what we call the four corners, which is the chair and ranking members of the Senate Health and the House Energy and Commerce committees in Congress. By using these committees and hearing markup processes, we can catch a ride on a must-pass piece of legislation like the drug pricing bill or the 2024 spending bill. All of this really happens in the fall, but the groundwork and the process and support by focusing on these ranking committee members in Congress is where we're at right now. Does that answer your question? Yeah, no, I appreciate that. That's great detail for that. Just my last follow-up here. You mentioned ReCreate. I just wanna kind of follow up on that lifestyle brand launch. You provide a little bit color of the positioning of it, but how should we look at this with the product mix or the SKU availability ahead of, you know, Major League Baseball and their marquee events this summer and fall, kind of the roll, you have one tincture now, but kind of the rollout to really drive growth towards the H2, kind of the SKU opportunity there for that ReCreate brand here in the H2. Sure. Yeah. Scott. Go ahead, Jared. I was just gonna say, I think, you know, we've launched ReCreate tinctures, you know, and, you know, we're gonna be launching additional SKUs, additional formats, in concert with the first, you know, the All-Star Game in July. You know, we should see some pipeline into retail later in the year. I'll let Jared kind of take you through the need states and the formats that we're initially gonna have in the market, and it's sort of a pipeline of what's to come. Yeah. Hey, sure. Hey, Scott. We're looking at the brand as new targeted need states. I don't know if you recall we were engaged the MLB process, we were really saying the game is played in the eight inches between your ears. What they really wanted to support were for athletes and consumers alike, was mental wellness, sleep. We took our need states even further. We have a brain support that hits mental wellness but really is built with a Lion's Mane CBD, which gets us into the whole new functional mushroom category. Functional mushrooms would, y ou could compare it to what CBD was four or five years ago in its growth. We've got a sleep product which uses a botanical passionflower. We looked at our sleep gummy SKUs today in the current legacy, Charlotte's Web, and it's our number one selling SKU. I would contend, is that product in the CBD market, or is it in the melatonin market? This allows us to get to a sleep product with a functional botanical. We also have gone even further to get more active lifestyle support for, you know, your everyday consumer. We've hit muscle recovery with a tart cherry, as well as endurance with a beet powder. Those are the new need states that are coming out. We're also focusing on what I refer to really more as an innovation behind tinctures to support the decline in tinctures. These are spray formats. Think grab and go, throw in your gym. These would also be need states focusing on sleep, energy, endurance. Then we're also working on powder formats, which are soon to come, likely late this year or early next year. Which powders opens the door to multiple innovation formats. I think, Scott, if I could just add as well. I think we need to be clear that, you know, ReCreate is positioned against the targeted demographic groups, Gen Z, millennials, which is really an opportunity and a white space for us when you think about, you know, the consumers going into the Charlotte's Web brand. First and foremost, very, very different targeted approach in terms of, you know, the brand, how we position the brand, lifestyles, and how we price it. You know, on a more affordable basis for consumers, as I mentioned earlier, relative to Charlotte's Web. I think the fact that the need states, the formulations, the pricing, and the targeted demographics we're going after, and the MLB support and amplification as we go through the term of the deal with them, you know, really positions us for incrementality as opposed to, you know, running what we do typically see as more of a cannibalization risk. We're very comfortable that this unlocks an ability for us to be much more relevant with a different demographic of consumers who can come into the ReCreate brand but also have the availability of then going, for example, on our e-commerce platform and shopping the rest of the Charlotte's Web portfolio, depending on what their specific needs and what they're looking for. You know, we're looking at this as a very different. It's not an ex-brand extension, if you will, but it's a new line, new product, new look and feel, new messaging, new formulas targeted at new consumer states that we don't really address today. I really appreciate that color and detail. Thanks. I will pass it on. Thank you. Your next question comes from Derek Dley from Canaccord. Please go ahead. Yeah. Hi. Thanks. Good morning, everybody. I just wanted to talk a little bit about the margin difference between gummies and tinctures. Is there any notable difference there, or is the impact to the PNL mostly on revenue? I'd say I'll start and turn it over to Jessica for any color. It's really much more of a negative mix than it is margin. You know, we do, whether it's tinctures, which we produce in-house, or gummies that, you know, we produce today through co-man, our margins are pretty healthy across the portfolio spectrum. It's really more of a revenue mix impact than it is a margin impact, as you've seen with the margins that we put up in the Q1. Right. On the co-manufacturing, I mean, is there a point where the gummy mix SKUs, you know, higher as a percentage of your revenue that it would make sense to potentially bring that in-house? Do you guys have the capability or the capacity to be able to do that over time? Yeah. Derek, thanks for that question. The answer is yes. You know, we have the capacity, and more importantly, we've made the capital investment a few years ago. You know, recall we put $40 million into a state-of-the-art facility. We're operating at about, I'll call it 20% capacity, plus or minus. We have the capacity. We've invested the capital. To your point, you know, when the economics turn in our favor, we will certainly be looking at that, and more to come there. Not only gummies, by the way. I mean, we have the opportunity to bring other things in-house as well over time. Certainly one of the things we're looking at, you know, as we look forward in our strategic execution of plans, but, you know, more to come. Okay. Can you maybe just give us some color on your. You know, when I think about your overall revenue split or product mix, however you guys wanna put it, what percentage of sales or volumes is more value-focused these days versus premium-focused? You know, again, I'll let Jessica come in, but I'd say Charlotte's Web, across all of our formats, continues to be, you know, priced at a premium to the rest of the competition. We're very concerned about keeping that brand equity. You know, we continually look at our pricing relative to the competition and you know, that's another opportunity for ReCreate to bring new consumers into our brand world, you know, with a more sort of appropriately, you know, standard price kinda SKU set to complement what we're doing in Charlotte's Web's portfolio at the moment. Overall, we still. You know, we believe we do have a premium product that deserves premium pricing. It's always a question of, you know, how much is that index and where is the sweet spot for it, which we continually look at. Yeah. In terms of, I guess, just that industry pricing, you know, as you start to see some of these smaller scale brands go away, and, you know, I think you mentioned 1,000 going to hopefully 20 or 30 over time, have you seen that pricing change at all? Is it starting to stabilize? Any changes there just in the dynamics around pricing over the last two quarters? Yeah. We've seen a relative stability in pricing. There's mixed impact on overall pricing as well. As we mentioned earlier, you know, our average retail price, you know, has grown when the categories come down. You know, we've been relying less on price promotions. You know, when products don't turn at retail, you know, and you don't have the brand equity, then there's only one thing you can do to move product, and that's take pricing down. You know, we have done as we think appropriately to protect pricing and that premiumization. You know, we constantly need to look at the level of index of our brands versus, you know, the competitive set that remains. You know, I'd say again, for us, relative stability pricing. Yeah. Okay. That's good to hear. Thank you very much. Cool. Thank you. Thank you. There are no further questions at this time. You may proceed. Well, I'd like to thank everybody for participating in our Q1 call. We'll look forward to speaking to you again after our Q2 results in August. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.